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A report released by Jefferies shows that Indian households prefer physical assets like real estate and gold over financial assets like insurance and mutual funds.
Of the total household assets of 11.10 trillion dollar as on March 2023, a major portion i.e. 66% are invested in real estate and gold, shows that report. While real estate accounts for lion share with 51%, people have invested 15% of their assets in gold.
Among financial assets, bank deposits account for 14% of the total household assets while insurance and pension funds contribute 6% each.
Further, Indian household have 5% exposure to equities. Also, they keep 3% of their total assets in cash, shows the report.
Let us look at this interesting table to know more:
|
Total Indian Household Assets (Mar 2023): 11.1 trillion dollars |
|
|
Asset Class |
% of Household Assets |
|
Property |
50.7 |
|
Gold |
15.5 |
|
Bank Deposits |
14.0 |
|
Insurance Funds |
5.9 |
|
Provident & Pension Funds |
5.8 |
|
Equities |
4.7 |
|
Cash |
3.4 |
Chennai MFD Chokkalingam Palaniappan of Prakala Wealth feels that many Indians invest in real estate due to social conditioning. He said, “Shelter is one of the basic necessities. Hence, a major chunk of household assets is understandably in property. This is also due to the social conditioning, where parents typically advise children to first built property and then create a gold corpus for emergency purposes.”
He added, “Given the guaranteed income backed with the strong distribution networks of banks, many Indians prefer fixed deposits.”
Elaborating this further, Mumbai RIA Suresh Sadagopan of Ladder7 Wealth Planners said, “People have been investing in these products from a very long time. Moreover, these asset classes are simple to understand. But when it comes to equity investing, many people think that it is gambling. Also, the market volatility has made many wary of equities.”
“However, equity investing is all about picking and choosing the appropriate product, investing for a certain period of time, taking calculated risks and waiting for the asset to deliver. In fact, over time, equity gives more capital appreciation,” he added.
Though the household assets are currently skewed towards traditional assets, Chokkalingam anticipates this difference to gradually disappear. He said, “As the economy grows, GDP increases and surplus income goes up there will be a shift from traditional asset classes to equity and mutual funds in turn.
